Navy and Marine F-18 availability has dropped from traditional in-service levels of ~70% to under 40% due to decades of reduced aircraft procurement and the limitation of aviation support services from the 2013 budget sequestration. Reduced procurement dates back to the end of the Cold War when the Navy bought fewer F-18s than originally expected and the Marine Corps didn’t buy any because of beliefs in decreased future military operations and anticipation for the new Joint Strike Fighter.
This past week, Defense Secretary James Mattis officially introduced his plan for rebuilding the U.S. Armed Forces to address President Trump’s national defense strategy. Mattis issued a memo to Pentagon budget planners announcing his desire to “build a larger, more capable, and more lethal joint force” and provided guidance for the FY2017 budget amendment, the FY2018 President’s Budget request, and the FY2019 – FY2023 Defense Program.
Boeing, Lockheed Martin, Northrop Grumman, and Raytheon all announced year-end earnings this week, with only Boeing receiving a positive market reaction from the earnings calls. Boeing beat forecasted quarterly earnings and raised guidance on its 2017 cash flow and profit compared to 2016, even as the company faces questions transitioning from the 777 to the 777X program.
On Friday, the Senate confirmed General James Mattis to be the new Secretary of Defense hours after President Donald Trump’s inauguration. Earlier that day, Trump signed legislation granting Mattis a one-time exemption from the law requiring the Secretary of Defense to not be employed by the armed services for at least seven years.
Earlier this week, the Senate began confirmation hearings to vet President-elect Donald Trump’s Cabinet nominees. General James Mattis, the Secretary of Defense nominee, received broad bipartisan support after taking a strong stance against Russia and vowing his support for the Iran nuclear agreement. General John F. Kelly, Trump’s nominee for Secretary of Homeland Security, also received widespread support after insisting that his top priority would be to secure the southern border.
President Elect Trump has made strong remarks about indicating a desire to increase the U.S. Navy’s ship count by 28%, from its current 274 to 350. Based on these remarks, the U.S. Navy stands to be a substantial ‘winner’ in gaining additional funding in the coming years. Trump’s recent comment referring to China as an enemy of the U.S. would create an increased need for a strong presence in the Pacific Ocean.
Since October 1st, the United States has already eclipsed the GFY2016’s total foreign weapon sales by almost $12 billion, bringing the total to $45.2 billion. The sharp increase can be attributed to 72 F-15s sold to Qatar and 32 F-18s sold to Kuwait.
On Wednesday, President-Elect Donald Trump met with Boeing CEO, Dennis Muilenburg, and Lockheed Martin CEO, Marillyn Hewson, to discuss cost reductions to Air Force One and F-35 fighter jets. Both aircraft manufacturers came under fire earlier this month after Trump tweeted that the costs for those aircraft are ”out of control”.